How to Conquer the Married Put Strategy (A Simple Guide)

This article will delve into the intricacies of my best married put strategy and discuss how you, as a trader, can use this strategy to hedge your portfolio.

A married put is an option strategy in which the options trader buys an at-the-money put option while simultaneously buying an equivalent number of shares of the underlying stock.

A trader would enter into this position when they are bullish on a stock, want the benefits of stock ownership (dividends, voting rights, etc.), but they are wary of uncertainties in the near term.

Don’t worry if this doesn’t make sense at first, we will dive into the specifics of the married put strategy bellow.

The Basics of a Married Put

A married put is a lot like an insurance policy on a home: You purchase your home (the stock) but also insurance (the put) in case the home is damaged (the stock price plummets).

A married put refers to the combination of two different purchases: one of a stock position and one of a put option.

Let’s consider the following purchase.

Let’s say you choose to buy 100 shares of XYZ for $20 per share and one XYZ September $17.50 put for $0.50 (100 shares x $0.50 = $50).

With this combination, you have purchased a stock position with a cost of $20/share but have also bought a form of insurance to protect yourself in case the stock declines below $17.50 before the expiration (third Friday in September).

You should remember that for a put to be considered “married,” the put and the stock must be bought on the same day, and you must instruct your broker that the stock you have just purchased will be delivered if the put is exercised.

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